Extreme Weather and Ratings on Corporate Climate Mitigation Policies

Abstract

Using county-level data on severe meteorological events in the United States, I show that, controlling for county fixed effects, the annual number of extreme weather events (EWEs) sustained at a county significantly improves the subsequent rating of the climate mitigation policies of a firm headquartered in that county. I also find that more recent EWEs have a more pronounced impact on climate ratings than more distant ones. The results show that managerial experiential processing of weather information is important to determine corporate climate actions.